8.2.1 Process customer credit (10742) 8.2.2 Invoice customer (10743) 8.2.3 Process accounts receivable (AR) (10744) 8.2.4 Manage and process collections (10745) 8.2.5 Manage and process adjustments/deductions (10746)
Background
ACME Co. produces and sells anvils and jet powered roller skates. Its owner Wile E. Quixote, would like to implement an Accounting Information System to support ACME's accounts receivable department. Increased sales have made ACME's paper and file receivables system a slow and inefficient process. ACME needs a system that can process customer credit, invoice the customer, process incoming receivables, manage and process collections, and can deal with adjustments and deductions to the accounts.
Narrative
Acme Co. Management determines credit policies. Customer provides financial data for credit application. Employees will input new customer information into the system. The system will apply the credit policies to examine new account applications and approve these applications based on the results. An Employee will notify the new customer of an approval or denial. At the end of every month, the system (1) checks the customer accounts master file to validate existing customer accounts, (2) transmits a valid or past due notice to the customer and (3) a credit/collection report to management. Upon receipt of payment from the past-due customer the system will apply credit policies and if approved reinstate the customer's account.
At the end of each month, the A/R Manager checks the customer account master file for monthly account balances. The system generates a report for management and transmits billing data and monthly invoices to customers with receivables outstanding. A customer calls with a billing inquiry. An employee queries the customer account master file for information on individual account balances and sales orders. The system will then display the information to the employee who can answer any questions regarding the account. The employee relays the information the inquiring customer.
Management establishes accounts receivable policies for the company on how payments and reports are to be processed. The customer remits payment and turnaround payment coupon (remittance advice) for the accounts to a lockbox established by management. Weekly, the employee accesses the lockbox account on the Internet via read-only access, and prints the week's receipts, payment coupon, and a batch total for reconciliation. The employee then posts each receipt to the appropriate customer invoice. A subledger report for the week is then generated by the employee and reconciled to the lockbox receipts' batch report to ensure completeness. The employee will then send the reconciliation to management. Management reviews the reconciliations on a monthly basis. After management approval, A/R reports are signed off on and sent to the accounting department to be entered into the general ledger.
Management creates a set of policies for accounts that are considered delinquent. Employees then use the polices and the system to examine the balances and status of delinquent accounts. On a monthly basis, the employee is to generate an A/R aging report and compare the current month to the prior month in order to determine which accounts are still delinquent. If contact with the delinquent customer is successful, the employee will attempt to negotiate possible solutions for the delinquent account based on the preferences of management. Once negotiation is made with clients, account resolution for delinquent accounts will be discussed internally with employees and management in an attempt to resolve delinquent account status. If delinquent account is able to be resolved then adjustments will be made the customer account master file. If contact with client is not successful or client will not negotiate, delinquent balances will be written of by employees and sold to a collection agency.
Management establishes policies and procedures for adjustments and deductions. At the end of each month, an employee will analyze the customer accounts to see if there has been an overpayment. If an overpayment is present the employee will add a credit memo to the database which is automatically accessed and applied to future payments by the customer. If the customer is dissatisfied with their order, they can contact an employee who will discuss the issue with management. Management will then decide if the customer is due a refund or will have a credit memo placed on file for future purchases. Chargeback memos are automatically prepared on future payments by the system to adjust the customer's new invoice. The chargeback memos are also sent to the accounting department to process the related entries.
8.2 Perform revenue accounting (10729)
8.2.1 Process customer credit (10742)
8.2.2 Invoice customer (10743)
8.2.3 Process accounts receivable (AR) (10744)
8.2.4 Manage and process collections (10745)
8.2.5 Manage and process adjustments/deductions (10746)
Background
ACME Co. produces and sells anvils and jet powered roller skates. Its owner Wile E. Quixote, would like to implement an Accounting Information System to support ACME's accounts receivable department. Increased sales have made ACME's paper and file receivables system a slow and inefficient process. ACME needs a system that can process customer credit, invoice the customer, process incoming receivables, manage and process collections, and can deal with adjustments and deductions to the accounts.
Narrative
Acme Co. Management determines credit policies. Customer provides financial data for credit application. Employees will input new customer information into the system. The system will apply the credit policies to examine new account applications and approve these applications based on the results. An Employee will notify the new customer of an approval or denial. At the end of every month, the system (1) checks the customer accounts master file to validate existing customer accounts, (2) transmits a valid or past due notice to the customer and (3) a credit/collection report to management. Upon receipt of payment from the past-due customer the system will apply credit policies and if approved reinstate the customer's account.
At the end of each month, the A/R Manager checks the customer account master file for monthly account balances. The system generates a report for management and transmits billing data and monthly invoices to customers with receivables outstanding. A customer calls with a billing inquiry. An employee queries the customer account master file for information on individual account balances and sales orders. The system will then display the information to the employee who can answer any questions regarding the account. The employee relays the information the inquiring customer.
Management establishes accounts receivable policies for the company on how payments and reports are to be processed. The customer remits payment and turnaround payment coupon (remittance advice) for the accounts to a lockbox established by management. Weekly, the employee accesses the lockbox account on the Internet via read-only access, and prints the week's receipts, payment coupon, and a batch total for reconciliation. The employee then posts each receipt to the appropriate customer invoice. A subledger report for the week is then generated by the employee and reconciled to the lockbox receipts' batch report to ensure completeness. The employee will then send the reconciliation to management. Management reviews the reconciliations on a monthly basis. After management approval, A/R reports are signed off on and sent to the accounting department to be entered into the general ledger.
Management creates a set of policies for accounts that are considered delinquent. Employees then use the polices and the system to examine the balances and status of delinquent accounts. On a monthly basis, the employee is to generate an A/R aging report and compare the current month to the prior month in order to determine which accounts are still delinquent. If contact with the delinquent customer is successful, the employee will attempt to negotiate possible solutions for the delinquent account based on the preferences of management. Once negotiation is made with clients, account resolution for delinquent accounts will be discussed internally with employees and management in an attempt to resolve delinquent account status. If delinquent account is able to be resolved then adjustments will be made the customer account master file. If contact with client is not successful or client will not negotiate, delinquent balances will be written of by employees and sold to a collection agency.
Management establishes policies and procedures for adjustments and deductions. At the end of each month, an employee will analyze the customer accounts to see if there has been an overpayment. If an overpayment is present the employee will add a credit memo to the database which is automatically accessed and applied to future payments by the customer. If the customer is dissatisfied with their order, they can contact an employee who will discuss the issue with management. Management will then decide if the customer is due a refund or will have a credit memo placed on file for future purchases. Chargeback memos are automatically prepared on future payments by the system to adjust the customer's new invoice. The chargeback memos are also sent to the accounting department to process the related entries.
Entities and Activities Table:
Context Diagram:
Level 0 DFD: